Gasoline Prices Start to Level Off

Gasoline prices held steady this week, with the national average price of regular unleaded unchanged at $2.20 per gallon. That’s about 50 cents more than the low reached this spring, when much of the country was staying off the roads due to the coronavirus pandemic. But it’s still about 55 cents cheaper than gas was at this time last year. Diesel is also largely unchanged, with the national average price now at $2.43 per gallon. A week ago, it was $2.44. Odds are fuel prices will hold relatively flat in the coming weeks. Demand is coming back as more people return to work and their commutes. But oil production is also rising around the world, which should keep prices from increasing much.

Benchmark West Texas Intermediate crude has held close to $40 per barrel in recent weeks, despite many daily dips and spikes. Worldwide oil consumption hasn’t returned to its prepandemic levels, but it is rebounding. OPEC and other oil exporters are responding by cautiously increasing their oil production, which they slashed this spring when the world was awash in excess oil. So, while we expect prices to remain jittery, we don’t look for any major swings up or down.

Natural gas prices can’t mount a rally, even with a severe heat wave gripping much of the United States. Gas demand has picked up as power plants burn more gas to keep air conditioners working around the clock. But that pickup in demand hasn’t been enough yet to reduce large stockpiles of gas held in underground storage. And even as homeowners crank up their air conditioners, industrial and commercial gas consumption remains soft because of coronavirus-related disruptions to manufacturing and other business lines. If the summer heat sticks around, gas futures prices could perk up a bit. But for now, they’ll likely stay close to their current level of about $1.64 per million British thermal units.